​It’s tough to retire a tad earlier than the traditional age, even though you may know at heart that you’ve probably got far more than enough. As with most things relating to budgets, there is no magic number that works for everyone. For some, something close to $1-2 million could be enough. For others, whose  Read More Lifestyle 

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It’s tough to retire a tad earlier than the traditional age, even though you may know at heart that you’ve probably got far more than enough. As with most things relating to budgets, there is no magic number that works for everyone. For some, something close to $1-2 million could be enough.

For others, whose dream retirement lifestyle entails frequent travels, upgrading to a larger home, a fancy collection of cars, luxury products, a boat, and lavish gifts for loved ones, it could take closer to $12 million (or more) to sustain a lifestyle.

Of course, you’ve probably heard about athletes who’ve gone broke shortly after retirement because their lifestyles simply could not keep up after the big money stopped flowing in. It’s more a matter of balancing (passive) income and cash to be withdrawn from your retirement savings with your expected expenses.

In any case, the key is finding your right retirement figure based on your spending plans and habits, comfort with investing in the stock market, and the sum you hope to leave behind for loved ones.

A well-off Reddit couple has a huge nest egg and a rather conservative approach to investing. Are they being too cautious?

In this piece, we’ll have a closer look at a Reddit couple who’s socked away around $3 million in retirement accounts. Combining their other assets, they’ve got a net worth of just north of $4.5 million. Indeed, that’s no chump change.

The couple seems to be erring on the side of caution with a more conservative approach that entails CD (Certificates of Deposit) ladding. Indeed, laddering CDs at the right times can allow greater flexibility without having to sacrifice on the front of returns, like cashable CDs, which tend to have lower rates for the added flexibility and relative lack of penalties for early cash outs.

Additionally, they’re preparing to get another $2 million coming their way once their 90-something parents pass away. All considered, they’re projecting to have anywhere from $6-8 million within the next decade. That’s more than enough to finance most retirements, in my view.

Everyone’s retirement dreams are going to differ, perhaps greatly.

But what exactly is their definition of a “dream” retirement? They’re not looking to own a yacht or anything extraordinary. They merely seek financial freedom to fund what appears to be a fairly normal middle-class kind of lifestyle.

Of course, they want extra cash to keep providing for their child while also having enough to splurge on travel, leisure, hobbies, and other sorts of experience that are quite typical of the newly retired.

By this definition of retirement, I think they’re well ahead of the curve, even if they’re heavier on the risk-off investments (think CDs) compared to other retirees who may have a more aggressive (think higher equity allocation) approach. With such a massive nest egg, the couple can afford to stick with conservative investments, like CDs, which will likely be enough to help them stay ahead of inflation.

The bottom line

At the end of the day, if lower-return, but risk-free securities are enough to get the job done while allowing you to sleep like a baby at night, there’s no shame in sticking with them. Though, I would encourage the couple to seek the advice of a retirement planner because they may be leaving gains on the table by being overly conservative with their asset allocation.

When it comes to conservative investors, though, going heavy on stocks isn’t the right answer. However, perhaps sprinkling a bit more into equities can make sense, especially if there are plans to leave a larger nest egg behind for their child.

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